Fourth-Quarter Earnings the Next Concern

Third-quarter earnings reports are still coming in, Home Depot reported this morning, but the bulk of the season is over, and it’s looking like the worst quarter for corporate profits in three years. This isn’t a stunning conclusion; it’s the one, after all, everybody expected.

The question now is what will the fourth-quarter look like. The answer, as much of an answer as we can provide with nearly two months left in the quarter, isn’t very reassuring. The third-quarter may indeed represent a trough, but estimates are still coming down for the fourth-quarter and 2013.

Third-quarter profit growth is bad however you look at it. S&P Capital IQ pegs it at 2.2%, Thomson Reuters has it at negative 0.2%, an actual contraction in profits.

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